Is the German nuclear phase-out fundamentally botched?

A recent editorial at Reuters charged that German nuclear policy is uncoordinated, particularly because the cost of nuclear waste disposal is still unclear. In reality, Merkel’s 2011 phase-out was a return to a former plan only briefly abandoned. And Germany’s phase-out budget looks pretty good internationally. Craig Morris explains.

The nuclear decommissioning and repository fund is the original sin of Germany’s nuclear phase-out. (Photo by Holger Weinandt, modified, CC BY-SA 3.0 DE)

In “Exit now, pay later: Germany’s rushed farewell to nuclear power,” the Reuters authors argue that Germany has decided to shut down its nuclear reactors without knowing how to finance reactor decommissioning and final waste disposal. The analysis is correct, as the numerous quotes by German energy experts show. But is it different anywhere else?

The next day, Reuters published a different report showing that the German phase-out fund should contain 4.7 billion euros per reactor, compared to 3.3 billion in the UK – and “just 1.2 billion in France.” The German provisions could thus fall a third short and still be in line with the UK – and three quarters short to be at the French level. Maybe Germany is the only one of those three countries that has somewhat realistic provisions.

This money is not in a governmental fund, however. The firms themselves set it aside on their books, but in practice they reinvested it, so the money is not really there at all. (They squandered it partly on ill-advised international expansion, as this report in German from 2015 explains in detail.) So the “fund” does not exist if the reactor owners go bankrupt.

The “Exit now” article assumes that the phase-out caused this financial misery. In fact, the phase-out gave power firms a brief respite. If the nine (of 17) reactors switched off immediately after Fukushima were online today, there would be even more overcapacity – and hence, even lower wholesale prices. Back in 2003, when the first reactor was switched off as part of the first phase-out, the firm itself (E.On) cited “economic reasons,” pointing partly to lower wholesale prices at the beginning of power market liberalization (report in German). This year, the only reactor to be shut down was also closed prematurely – again by E.On, and again for economic reasons. Without the 2011 phase-out, nuclear reactors would have joined the already long list of conventional power plants that have requested early closure for economic reasons.

The nuclear decommissioning and repository fund is the original sin of Germany’s nuclear phase-out, but that’s nothing new. As the previous paragraph illustrates, we need to know three main dates:

2002: the original nuclear phase-out under Chancellor Schroeder (Social Democrat) takes effect (yes, 16 years after Chernobyl – so much for Germany’s nuclear phase-out being a “rushed farewell”…)

2010: the extension of reactor commissions by 8-14 years under Chancellor Merkel (Christian Democrat), postponing the original phase-out from the early 2020s to the mid-2030s

2011: the reinstitution of roughly the original phase-out deadline (but with some important tweaks)

Seen within this context, the 2011 phase-out – despite the tweaks – was certainly unexpected and definitely quick, but Merkel had a decade of an actual phase-out to fall back on along with a good 25 years of negotiations. When she created an Ethics Commission for the 2011 phase-out, she asked it two questions (wording in German):

how can I design the phase-out so that the transition to renewables remains practicable and reasonable, and

how can I prevent the shifting of risks from German reactors to foreign reactors, such as through power imports?

The second question is silly; nuclear reactors run at their highest feasible capacity already, so significantly greater nuclear power exports to Germany are not possible (aging French nuclear reactors). Merkel had to ask that question, however, because so many Germans were asking it at the time as well (report in German). We also know the answer to the first question already: nuclear never made up more than around 30 percent of German power supply, and the country has around 30 percent non-hydro renewable electricity this year with half of the nuclear fleet still online. Reuters says wind and solar “help fill the energy gap” left by the phase-out, but in fact there is no gap. Renewables (please don’t forget biomass) have more than offset nuclear and brought fossil-fired electricity to a 35-year low in 2014 (we still await Reuters’ report on that).

Unfortunately, Merkel didn’t ask the Ethics Commission how to pay for a nuclear repository indefinitely. To be fair, no one knows. The option seems to be tax money or propping up these utilities artificially. But isn’t the latter the very definition of “too big to fail”?

It’s true: Germany went ahead with its phase-out without knowing what to do with the waste. Keeping the reactors on doesn’t solve the problem, however.